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Netflix Deal With Comcast: Net Neutrality Domino?
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D. Henschen
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D. Henschen,
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2/24/2014 | 12:30:03 PM
Pollyannas think carriers won't use their clout
The court of public opinion will not hold carriers in check. How many times have these guys held up Fox, CBS and other big content providers in the cable world? Now it's happening with Internet content, and the only thing to stop them from holding content providers over a barrel is the law. There's not enough competition and freedom of choice for the free market to work.
Lorna Garey
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Lorna Garey,
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2/24/2014 | 1:15:53 PM
Re: Pollyanna's think carriers won't use their clout
There's also the fact that this helps Netflix stifle competition. It can afford to pony up the vig to Comcast. A smaller startup seeking to compete? Not so much. It's bad for consumers.
dallasdivr
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dallasdivr,
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2/24/2014 | 2:07:53 PM
Re: Pollyannas think carriers won't use their clout
This sounds to me like a peering arrangement.  If so, it's completely different than net neutrality.  With peering Netflix is tying their network directly to Comcast's to remove intermediaries.  Net neutrality is about throttling a sites throughput.  One is about a carrier intentionally slowing down a site's traffic, the other is about a site getting closer (network wise) to their end customer.  In peering one side will typically pay if the traffic between the two networks is imbalanced.  I'm pretty sure Netflix sends more traffic to Comcast than Comcast to Netflix.

 

The sky isn't falling yet.
JarinArenos
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JarinArenos,
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2/24/2014 | 2:25:36 PM
Re: Pollyannas think carriers won't use their clout
This misses the context here. Comcast HAS been throttling Netflix data. This is not a peering arrangement, this is the mob standing outside the Netflix china shop with baseball bats saying "It'd be a shame if anything happened to your data..."

Edit: For clarification, peering was the deal Comcast made with Netflix's partner "Level 3" several years ago. Forcing a fee on Netflix directly is the dangerous step. 
jfeldman
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jfeldman,
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2/24/2014 | 2:40:47 PM
Re: Pollyannas think carriers won't use their clout
Actually, according to Light Reading:

... here are the facts. The new peering agreement does not mean that Comcast will put Netflix's caching appliance in its last-mile network the way some other providers have. Several outlets are reporting that Comcast is not supporting the Netflix appliances, and Light Reading has confirmed with a source close to the deal that this is indeed the case.


There's nothing that says or implies that the bogeyman is present: traffic priority is not being bought and paid for.  In fact, LR reported Comcast as saying, "Netflix receives no preferential network treatment under the multi-year agreement." 
Lorna Garey
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Lorna Garey,
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2/24/2014 | 4:41:46 PM
Re: Pollyannas think carriers won't use their clout
"In fact, LR reported Comcast as saying, "Netflix receives no preferential network treatment under the multi-year agreement."

Come on, if that's so, what are they paying for? To NOT be slowed down? That sounds much like the baseball bat/china shop analogy.
rradina
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rradina,
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2/25/2014 | 7:57:38 AM
Re: Pollyannas think carriers won't use their clout
Meez Lorna, is it?  Do Ize have dat correct?  Ok. Mis Lorna.  Yoo 'a daunta undastand.  Weeza mean no harm.  Weeza all a concerned about da beezness.  Weeza in da beezness too, yoo know.  Weeza make a tings eezy and seemple for beezness.  Weez only want a whatsa good for all.  Nading more, nading less.  Seez?  Seez how seemple it iz, Mis Lorna?
Lorna Garey
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Lorna Garey,
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2/25/2014 | 11:07:13 AM
Re: Pollyannas think carriers won't use their clout
Well, I assume that you're channeling the late, great Gandolfini as Tony Soprano. And as someone raised on ziti and gravy, I can relate. However, as with some Sopranos episodes, this is one case where the motives are somewhat fuzzy. If I were thinking of starting a service to compete with Netflix, I might take a moment to think twice. Capisce?
rradina
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rradina,
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2/25/2014 | 11:52:59 AM
Re: Pollyannas think carriers won't use their clout
I don't think the motives are fuzzy.  Comcast provides a service to its customers.  The customers pay for that service.  If the service suddenly changes and customers complain because it no longer meets their needs, it's up to Comcast to make sure their service provides what their customers want.  If resolving the issue requires additional funds, they seek funds from their customers.

Suppose you need your car's oil changed and you visit a quick change store.  They fail to staff sufficiently and stock enough product.  What should take 20 minutes, takes three hours.  Do you visit this store again or take your business elsewhere?  What if it's the only oil change store within 50 miles?  What if customers complain but the store's hands are tied because their prices don't allow hiring additional staff or adequately stocking product?  Rather than raise customer prices, the store manipulates the employees to work for less (cutting benefits, eliminating overtime, hiring less skilled replacements etc.).  On top of that, they extorts local suppliers, whose survival is dependant on the store's wholesale business, for cheaper product.

Competition solves the issues outlined in both paragraphs.  We don't have that and the result is distorted market forces.

If Comcast was losing money and desperately needed more funds to expand it's network and add capacity, perhaps my feelings would be different.  However, it's nothing of the sort.  A few talks, a little money exchanged and suddenly instant improvement.  While every business has the privilege to leverage their assets to the fullest extent for their shareholders/owners, they aren't generally allowed to do so in a competitive and regulatory vacuum.
anon4474372251
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anon4474372251,
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2/25/2014 | 1:46:32 PM
Re: Pollyannas think carriers won't use their clout
The idea that 'the last mile' is serviced by charitble contributions from publically held companies with charitable shareholders is incoherent. ISP's sell two classes of product, consumer grade 'best effort' bandwidth and enterprise grade bandwidth guarenteed by service level agreements (SLAs). Try to find the place on your cable bill where TW or Comcast commit to a course of action if you don't get the bandwidth you pay for. They don't and that is exactly why consumer grade internet is consumer grade internet -- you have no recourse if you don't get 10Mbps other than switching the an alternative ISP. Enterprise grade internet is enterprise grade because of the SLA -- I can measure the speed over time and I can derate my payment acording to a derating clause in the contract I signed. By the way, enterprise grade costs 3-5 times more than consumer grade.

 

About switching ISPs... There are only 3 ISPs (first order) 1. at&t, 2. verizon 3. Comcast+TW. That's it. All the other pipes are leased from these three (first order). Oh, by the way, all three have exactly the same SLA terms. The reason you cannot force Jiffy Lube to service your car in 30 minutes (or what ever they promise) is that you don't sign a contract when you drive into Jiffy Lube that has a price derating curve. That is like the ISP SLA. Domino's Pizza has what sounds like an SLA but try to take Domino's to court if they take 40 minutes to deliver your pizza and still charge you for it. Children. Don't listen to politicians and interests groups -- there is not now and has never been an animal called net neutrality. This is a gift from Santa that we have been fooled into believing.
Lorna Garey
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Lorna Garey,
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2/25/2014 | 5:02:22 PM
Re: Pollyannas think carriers won't use their clout
RRadina, Do you hold Netflix harmless here? Agreed 100% on Comcast and competition. When FiOS came to my neighborhood, suddenly Comcast really, really liked us. All those pesky yearly rate hikes? Fuggedaboutit. Expect that when Google Fiber gets to Boston, Comcast will start sending us annual fruit baskets.

However, Netflix is playing games, too. That's what I meant by motives.
rradina
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rradina,
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2/25/2014 | 7:00:00 PM
Re: Pollyannas think carriers won't use their clout
Netflix might be playing games too but they offer their CDN devices for free to alleviate the interconnect saturation issues.  Some have said that they ought to have to pay Akamai like others do.  I disagree.  Right now Netflix offers incredible OTT value and they seem to be looking for ways to change the status quo.  They are disruptive and good for consumers tired of paying ridiculously high video bills to traditional video distributors for 200 channels of reality TV with commercials and blasted pop-ups during content!  What I hear is a lot of whining and complaining along the lines of the classic Ed Whitacre quote "They are using my lines for free!  Waaaaa!". That's classic Ma Bell thinking and unless we were all happy with the days of paying for touch tone dialing and a fee to keep a number unlisted, I think we shoud side with the disrupter instead of the monopoly.
Brian.Dean
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Brian.Dean,
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3/2/2014 | 10:46:06 AM
Re: Pollyannas think carriers won't use their clout
Everything should be digitally communicated, movie and games etc, that's the aim. Netflix created a deal with Comcast and maybe in the near future Sony signs are deal as well to deliver their games, the average size of a PS4 game is 40GB. If the system is not monetized then data provides will not be able to finance hardware and labor, and consumers should not be expecting 4k video streaming anytime soon.

All this is entertainment material however, the value that consumers derives from 1MB of email data can have a lot more value at times in the eyes of the consumer, if the hypotheses is that these deals are going to create a situation where for example, 1 MB of data is becoming hard for consumers to access then the value of the internet will decrease creating a disequilibrium.
rradina
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rradina,
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3/2/2014 | 7:21:19 PM
Re: Pollyannas think carriers won't use their clout
Cable and wireless ISPs have been steadily increasing the speed of our connection for as long as I've had HSI (just after the turn of the century).  If it costs so bloody much to deliver all this, why do they keep increasing speeds and either decreasing prices or charging the same price?

If these folks cannot make ends meet without extorting NetFlix, Sony, Google and the rest, why do they keep increasing the speeds which only allows us to create the bandwidth Armageddon they've been preaching for the past decade?  It just isn't rational to double speeds every few years and then whine about caps, overages and the need to monetize the plant or lest someday soon, even e-mail won't get through.

It's almost like the looming nationwide cannabis legalization providing everyone ever-cheaper product and then complaining about how our consumption isn't sustainable unless the midnight fast food restaurants share some of their bounty.
jgherbert
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jgherbert,
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2/28/2014 | 10:34:03 PM
Re: Pollyannas think carriers won't use their clout
@LornaGarey:

"In fact, LR reported Comcast as saying, "Netflix receives no preferential network treatment under the multi-year agreement."

Come on, if that's so, what are they paying for? To NOT be slowed down? That sounds much like the baseball bat/china shop analogy.

 

As I have read it, Netflix previously peered with Cogent, and Cogent peered with Comcast. Since Netflix streams a huge amount of data in one direction, Comcast can reasonably argue that this is not a reasonable case for the usual peering agreements where it's assumed that data exchange is largely equal in each direction. Oddly then, what I read is that the actual problem with the "throttling" was between Cogent and Comcast, where the connection was saturated and Comcast wouldn't agree to uprate the peering connection bandwidth because they felt it was not a fair deal in both directions in terms of traffic.

What Netflix has done now - for better or worse - is to create a direct peering agreement with Comcast just like a regular customer would buy internet bandwidth, rather than through an SP-style peering agrement. And as I understand it, the definitions of net neutrality only cover what you do to traffic once it's on your network, and don't speak to the peering agreements and how you get the traffic on to it.

Now, where things would get interesting is if Comcast had agreed to let netflix locate their CDN devices within their network, which is really what Netflix wanted.
D. Henschen
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D. Henschen,
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2/24/2014 | 3:32:43 PM
Re: Pollyannas think carriers won't use their clout
Reports have it that both Comcast and Verizon have been crimping Netflix' bandwith since the January ruling on Net neutrality. Yes, there are technical differences between "paid peering" and "paid prioritization," but the bottom line is that Netflix is paying a carrier money to ensure good service. Which content provider will be next and how many carriers are going to get on that line for payments?
danielcawrey
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danielcawrey,
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2/24/2014 | 8:15:13 PM
Re: Pollyannas think carriers won't use their clout
I understand from the Comcast side of things why they feel that Netflix should pay them money. Netflix is basically running content through Comcast's lines. It's a bit of a conflict of interest. 

At the same time, this deal is not good for regular internet users. There is no neutrality anymore. But then again, one has to consider the fact that no one user is ever going to take up a third of all bandwidth. So in concept this is a problem but the reality of what it means is harder to grasp. 
WKash
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WKash,
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2/24/2014 | 8:31:55 PM
Re: Pollyannas think carriers won't use their clout
Everytime we see content providers and carriers go at it over proposed rate increases, and the war of ads begins over who's depriving whom of service, it's clear that those who control the pipes into homes and businesses have too little competition. Time for the FCC to finally have the same oversight over Internet providers as they do broadcasters.

 
KyleS211
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KyleS211,
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2/25/2014 | 12:11:19 PM
Re: Pollyannas think carriers won't use their clout
Ideally you are correct. Unfortuntely from a practicle stand point it is not really the FCC that is or can solve the problem.  It is called the "last mile" and that is and always has been the problem.  It cost too much for seven or ten companies to all have "pipes" into your neighborhood.  So the one that does is King Kong.  Just the way it is.
TerryB
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TerryB,
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2/25/2014 | 1:22:29 PM
Re: Pollyannas think carriers won't use their clout
So has the time come to treat cabling infrastructure, wired or wireless, the same way we do highways and roads? Make that part of what we pay taxes for. Then let the Comcast's of the world use that to provide actual service. Then we might have some actual feasible competition for that last mile.

That's by no means a perfect solution, I'm well aware we have hundreds of bridges in country we can't maintain with government in control. But there is no solution to the last mile issue, what technology is going to be invented to introduce true competition providing that access to each home? Cellular type wireless is only hope and right now I'm paying $30 a month for 3GB. That's certainly not feasible to take over my TV service, with myself, my wife and my daughter all watching HD on separate TVs.
KyleS211
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KyleS211,
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2/25/2014 | 1:48:13 PM
Re: Pollyannas think carriers won't use their clout
Instead of highways and roads, which is a good analogy.  I would point to the Telcom Act of 1934 (amended in 1996) that subsidies the telcos (primarily the Bell Companies) to lay the original last miles (copper wire) and also gave them right of way on roads and train tracks.  Many of which are still part of our infurstrucure today.  The Cable companies have been able to play by a different set of rules due to their timing (Reagan administration).  My hope is that better wireless technology will make this conversation obsolete, but we are not there yet.    
Charlie Babcock
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Charlie Babcock,
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2/24/2014 | 8:35:20 PM
Netflix motivated to pay to safeguard customers, discourage competitors
Netflix is willing to pay, not just to protect its customers' streaming needs, but to increase the price of admission for potential Netflix competitors. Amazon would also like to be a streaming content provider but it may not have counted on the cost of streaming going up, now that it's investing in content.


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